Chapter 10, Problem 10.11E

1.

To determine

Calculate the bond’s issue price.

2.

To determine

Identify whether the bond sold at a discount or a premium.

To determine

Calculate the amount of premium or discount

3.

To determine

Calculate the amount that would be reported on the balance sheet at the end of Year 1 and Year 2.

4

(a)

To determine

Show how cash payment of $60 was computed for Year 2.

(b)

To determine

Show how interest expense of $77 was computed for Year 2.

(c)

To determine

Show how amortization of $17 was computed for Year 2.

(d)

To determine

Show how balance (book value) of $981 was computed for Year 2.